TODAY ends months of speculation about tax increases (will she, won’t she?), cuts, investment, and all the rest.
It’s been what the former Bank of England chief economist Andy Haldane called “a fiscal fandango” that paralysed business with uncertainty.
The tragedy for the British economy, and for us attached to it, is that whatever Rachel Reeves does today will make no difference to the fundamental problem this British government faces.
Whereas Tony Blair’s big idea was “Education, education, education”, and he did increase the number of university students to more than 50% of the age cohort, this government’s priority is “Growth” but it will achieve none.
On Monday we learned that the Office of Budget Responsibility has once again downgraded its forecast for growth from the figure of 1% it predicted in March and, furthermore, has downgraded its forecasts for every year until 2029, the end of this government’s term.
Reeves can find a few billions in revenue and plug a few holes here and there but that’s still tinkering with the economy and does nothing to address the fundamental problem which has beached the UK where it is today. That is Brexit.
In the last couple of months, report after report from think tanks and academics have all laid bare the terrible damage Brexit did, and still does, to the British economy. Even Reeves has recently taken to admitting some of the damage.
Last week two more economists, John Springford and Andrew Sissons, published an essay entitled ‘Getting Britain out of the Hole’.
They show that since Brexit, Britain “has been undermining its own economic model which is founded on openness to trade, ideas and people”. Since leaving the single market, “Britain has fallen behind peer countries”.
The UK and EU agreed the Windsor Framework in 2023 (Dan Kitwood/PA)
The fall in exports has been taking one per cent a year from GDP. Losing easy access to EU finance has meant the City of London has lost out to rival stock markets.
The World Trade Organisation recorded a fall in exports from the UK of 17% since 2020, while other G7 countries’ exports have increased more than that figure.
Mini-trade reset deals with the EU that Starmer extols could add about 0.3% to GDP in the long term: maybe £9 billion by 2040.
A deal with Gulf states Reeves announced at the beginning of the month she said will “add £1.6 billion to UK GDP”. Yeah, right. That’s 0.07%.
Springford and Sissons’ solution? Join the single market for goods. Other experts say join the customs union, because being out of it costs Britain (not the north, incidentally) £30 billion a year.
You could add umpteen figures to this list. All the Treasury officials know the truth of it. The governor of the Bank of England knows it.
The Lib Dems are tabling a resolution on December 9 to rejoin a negotiated customs union with the EU. They’ll lose of course, but it’ll help embarrass the government.
Starmer knows all this too but he won’t budge. He has no political nous.
Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves (Danny Lawson/PA)
Remember he used to argue for rejoining the EU, never mind just the customs union or single market? He must also know that today’s budget won’t do anything for growth because of the giant Brexit-sized hole in the economy.
Since there will be no growth, there will be little investment, and Britain will remain stagnation nation.
Starmer boasts that wages have gone up since 2024 but they’re not real wages, which have hardly moved since 2008.
His refusal to contemplate the radical reset with the EU that is required means that inequality in Britain and here too, will increase, public services will not improve and his government is doomed.
Britain can no longer afford to borrow the money on international markets to pay for pensions and public services because the interest rate (yield) is unaffordable, so the country can’t afford to run the services people expect. It’s a doom spiral and we’re swirling down in it.
On November 19, five MEPs led by Barry Andrews asked the President of the European Parliament to allow northern politicians to have observer status in the parliament because northerners are EU citizens, participate in the single market and can rejoin the EU when they vote for reunification.
The predictable unionist response? Concentrate on improving the Irish Protocol, which the British call the Windsor Framework, so they can trade with Britain. Wowee. Worm’s eye world view.
Talk about pig in a poke, about demanding to stay in the ha’penny place shackled to the decomposing corpse of post-imperial Britain.
Pathetic.
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